On July 31, 2026, China's MIIT issued an announcement abolishing and revising policy standards for "cascade utilization" of used NEV power batteries, formally removing the concept from industry management. New rules require retired batteries to undergo dismantling, crushing, and smelting for resource recovery, strictly prohibiting simple reassembly and resale into high-risk applications like e-bikes and energy storage systems.
Policy Background: Surging Battery Retirements Force Regulatory Upgrade
China's rapid NEV expansion is creating an unprecedented challenge — a massive wave of retired power batteries. With NEV production and sales both exceeding 16 million units in 2025 and market penetration surpassing 50%, early-generation battery packs are entering end-of-life cycles. According to MIIT data, cumulative retired battery volume is projected to exceed 1 million tonnes by 2030.
Against this backdrop, "cascade utilization" emerged as an industry concept. It referred to processing retired batteries through testing, sorting, dismantling, and reassembly for lower-demand applications such as telecom base station backup power. However, this model has exposed serious safety risks in practice.
Four Policy Signals: From Concept Abolition to Hard Constraints
The MIIT Department of Energy Conservation and Comprehensive Utilization clarified four core adjustments:
- "Cascade Utilization" Formally Abolished: Under the Interim Measures for Management of Recycling and Comprehensive Utilization of Used Power Batteries, issued December 31, 2025, "comprehensive utilization" is strictly defined as resource recovery through dismantling, crushing, sorting, and smelting — the "cascade utilization" definition is entirely removed
- Market Re-Entry Threshold Raised Sharply: The announcement establishes that any used power battery seeking re-entry must fully meet quality and safety standards for its intended application
- High-Risk Applications Fully Prohibited: The banned list includes e-bikes, balance bikes, scooters, energy storage systems over 100 kWh, power banks, and toys — categories directly tied to consumer safety
- 100-Company Registry Abolished but Compliant Operations Unaffected: While the previously recognized "cascade utilization" enterprise list is delisted, firms meeting regulatory and quality standards may continue normal operations
| Policy Dimension | Before Adjustment | After Adjustment |
|---|---|---|
| Concept Definition | "Cascade" and "Comprehensive" coexisted | Only "Comprehensive" retained; "Cascade" deleted |
| Market Entry | Relatively loose; reassembly after testing permitted | Must fully meet target scenario quality/safety standards |
| Application Scope | Telecom, energy storage permitted | Banned from e-bikes, large storage, toys |
| Enterprise Management | 100 recognized enterprises enjoyed policy advantages | Registry abolished; market-based compliant competition |
Safety Risks: Why Cascade Utilization Had to Stop
Retired power batteries commonly suffer from inconsistent performance and widely varying residual capacity. Without rigorous quality control, simple dismantling and reassembly can trigger thermal runaway from overcharging, short circuits, or impact — posing severe threats to public safety.
The MIIT noted that some firms exploited the "cascade utilization" label to produce substandard battery products, blurring judgment standards for downstream businesses and consumers, creating product safety identification confusion that endangers the public. This issue is particularly acute in the e-bike sector: from April to June 2026, five ministries jointly launched a nationwide special enforcement campaign targeting illegal dismantling and non-compliant distribution of used power batteries.
Industry Impact and Global Implications
The new regulation marks China's power battery recycling transition from concept-guided to full-chain mandatory oversight. For automakers, this means building more robust battery lifecycle traceability systems — under the Interim Measures effective April 1, 2026, every power battery will be assigned a digital identity and entered into a national traceability information platform.
For automotive dealers and buyers in emerging markets like Central Asia and Russia, this policy sends an important signal: China's NEV industry is building a more mature, standardized closed-loop management system. From production and use to end-of-life recycling, every link is being incorporated into standardized management. This not only enhances the credibility of Chinese NEVs in global markets but also provides overseas buyers with more reliable product quality assurance.
As 2026 marks the start of China's 15th Five-Year Plan, the improvement of power battery recycling systems is seen as a key pillar for sustainable NEV industry development. For industry observers tracking China's NEV global expansion, EX1000.COM will continue monitoring relevant policy developments and market opportunities.
